The purpose of this month’s update is to initiate conversation on “Everything Real Estate”. We will be discussing Property Investing, Developing, Finance, Renovation and the latest and best practices for Property Management.
Regardless of whether you’re a first-time investor or multi-property owner, this month’s content will offer a practical approach on up to date strategies for today’s market.
A Great Time To Add Value
What a great time to look at each of our property investments and see if there’s an opportunity to add value. Interest rates are at an all-time low and in these uncertain times, we often find builders and tradespeople have extra time on their hands, creating an opportunity through better availability and pricing structures.
With people currently self-isolating, what better time to look at adding value? Can you build a granny flat on the block? Perhaps do a renovation to achieve more rental or create equity in your current property? Please remember most of our profit comes from the initial planning stage e.g.careful selection of fixtures and fittings, correct approvals and diligence in our investigations. If you are nervous beginning a project at this time, why not utilise your time to prepare and plan for future success.
Window Of Opportunity (Sydney Market)
Since 2014/2015 we have not seen a decline in site prices. In 2018, at the peak of the market, the second-hand market was still robust. In recent times, we have seen a decline in off the plan and new apartment prices, however, site prices did not adjust accordingly.
My experience tells me that the next three to six months will be the first time in a long time we will see advantageous buying opportunities in this sector. Currently may be a fantastic opportunity for investors to start looking at sites for their portfolio. I would, however, advise in the current market, it may be beneficial to follow this advice: Look at gross realisation and then take 10% off that figure. For example, if you’re looking at a $3 million gross realization, I would be working figures on $2.7 million to allow for any market correction.
If you need help with your next feasibility or site acquisition, please don’t hesitate to call, I am always happy to provide information based on my years of experience in development projects.
Importance Of Budgeting & Finance
It wasn’t long ago, around six months, that fixed rates were under 4%. I honestly thought that was the best it was going to be. Rates are currently in the 2%-3% range, so to think the interest on a $1 million property is around $400 a week is unfathomable.
In the current climate, now is the perfect time to deal with financial budgets, look at what we are spending, but more importantly, know your options when it comes to interests and cash backs.
Many banks are offering anywhere between $2,000 to $4,000 on a cashback scenario and are eager to secure lending.
It is important to be aware of the time constraints, due to the numbers of people seeking mortgage relief, remember it is possible that approvals could take up to 6 weeks. In the next month or so, I advise you to redo your personal budget and contact your bank or mortgage broker and
The Effect Of No Eviction
Residential and Commercial tenancies: These are unusual times for all of us and when Scott Morrison came out and asked us all to work together, that’s what we have to do, as fairly and just as possible, negotiating a win-win for both parties. Steps that we can take to ease the pressure:
1) Communicate with your tenant and find out their exact circumstances
2) Do not rush your decision, take your time, there is no pressure to make immediate decisions if you are unsure
3) Await the Government to confirm regulations in relation to rent and wage relief
4) Both parties need to understand that it is affecting both sides and we must work together as one for a solution
5) Owners need to understand it may take time for tenants to get their business back on track and similarly, tenants need to understand this will not be a gift, however some current relief, and at some time the interest and payments will need to settle
6) At this time unfortunately some parties will try and take advantage of the situation, so please make sure you are in touch with a professional property manager that can assist you in these matters
Times like this are a great time to refocus and get back to basics. I created my development business IDEAL Property Group and IDEAL Finance Group under the banner IDEAL, as I believe there is an IDEAL way to do business at all times, both in favourable times and in tough times.Our goal is to achieve our clients a win-win scenario enabling long term success, wellbeing and prosperity.